(201) Magazine Blogs

Tuesday, September 14, 2010

You remember the promise, right? The governor was going to help school boards and municipalities better control costs (and, thereby, better control property tax increases) by giving them a “tool kit” of new labor laws to level the playing field in dealing with public employee unions. Typically, personnel costs amount to 70-80% of municipal and school budgets, thanks to union-friendly labor laws passed by bought-and-paid-for state legislators of both parties and signed by weak-minded governors of both parties. Without those tool kit provisions, we don’t stand a chance of limiting public employee cost increases.

With the help of a Democrat-controlled but thoroughly cowed state legislature, the governor rammed through a budget that cut billions in state aid to education, aid to municipalities, property tax rebates, and state aid to dozens of other programs. (Amazingly, in a new benchmark for hypocrisy, Democrats are now complaining about the budget they helped facilitate.) Many of those eliminated programs, like free cancer screening, were, literally, life-lines for the poor and disadvantaged. The governor also got his cap on property tax increases enacted. With few exceptions, no town or school district will be able to raise the property tax levy more than 2%.

Christie felt it was more important to preserve a tax break for millionaires—a class of citizens dear to the governor’s heart—than to continue property tax relief for NJ homeowners. (He got his start by tapping millionaire friends for campaign contributions to George W. Bush, who promptly rewarded him with the U.S. Attorney plum. Before that, Christie was a failed, one-term, Morris County freeholder.)

In other words, all the “end-game” goals are in place. Undoubtedly, the governor will take full credit, as he promotes his national office ambitions in Iowa (where the first presidential-nominating caucuses will be held early in 2012) and elsewhere. How we as a state get to that promised land of fiscal responsibility without his “tool kit” is the problem. And, with the legislature’s new-found cojones after the governor’s inept handling of the “Race to the Top”—Bret Schundler affair, it appears now that towns and schools may never get those tools they need to negotiate effectively with public employee unions.

The governor’s goals may have been necessary to bring order and sanity to New Jersey’s fiscal situation, but imposing the end result he wanted to achieve before we got the means to get there—well, that’s what is wrong with this governor and his style of governance. Now that the formerly “limp” Democratic leadership has been emboldened by the governor’s recent misstep, I fear we may never get those much-needed tools. (God help me, I never thought I’d quote Sarah Palin.)

You see, a thorough overhaul of policy takes discussion with one’s opponents, some conceding of points in order to obtain points, compromise, reasonableness, understanding . . . wisdom, if you will. It cannot be done by fiat. This state still has a republican (small “r”) form of government, with a system of checks and balances afforded to the legislative and judicial branches by our state constitution. It is not a dictatorship of the executive branch, as much as the new Colossus of Trenton might like it to be.

Because of the opportunities this governor has squandered, New Jersey is in for more years of decline. Our schools, especially those exceptional districts in the suburbs where 90-100% of state aid was taken away, will sink into mediocrity. Our roads and bridges and other infrastructure will deteriorate even more than they have already. Our financial future will become bleaker.

If there is any silver lining to this cumulonimbus overcast enveloping our state, horizon to horizon, it is this. As New Jersey suffers under these ill-conceived policies of a poster-boy-for-the-Peter-Principle governor, maybe the nation will be spared the ineptitude of Chris Christie.

Friday, September 03, 2010

Governor Christie is about to pull the plug on state subsidies to the Meadowlands Racetrack, which would be, in effect, the beginning of the end of the horse-racing industry in New Jersey. According to a 2009 study by the Rutgers University Equine Center, as reported in The Record, horse racing in New Jersey accounts for “$780 million in economic activity annually, with 7,000 jobs and $110 million in annual local, state, and federal tax revenue, while preserving 57,000 acres of open space” in productive but eco-friendly use.

The governor would trash all this to save $13,000,000 in annual subsidies the state provides to the Meadowlands. Seems a bit short-sighted, doesn’t it? Just look at the bare numbers. Those 7,000 people who suddenly become unemployed? Let’s say 2,000 find work in another industry. That leaves 5,000 of them to collect 26 weeks of unemployment insurance at $500 per week, on average. That amounts to $13,000 per unemployed worker, or $65,000,000 in pay-outs by the State in year one. Also, those unemployed people will no longer be paying state income tax on what they had been earning. The local economies where they live will lose the economic activity, causing other negative effects on the overall financial health of the region. Anyway, you get the point. I’m just not sure this governor is looking at things in the right perspective.

Because of the possible negative impact on Atlantic City casinos, another big source of revenue for the state, the governor refuses to consider putting slot machines at the Meadowlands to help bolster horse racing—a scenario followed by New York State at Yonkers Raceway and more than a dozen other states to preserve their own declining horse racing venues. The positive economic impact of such a move is proven out by the Yonkers experiment. It boosted wagering by $6 billion in one year and added $250 million to New York State’s education needs and $48 million to help its harness racing interests. What the governor fails to consider is that people in northern New Jersey and New York City—folks who would have been a prime market for casino action at the Meadowlands—will not opt to go to Atlantic City, instead. They’ll simply go to Yonkers, less than 45 minutes away, or to the new casinos cropping up an hour away in Pennsylvania, rather than drive the 3 or 4 hours to Atlantic City. The net result will still be the death of the Meadowlands and the NJ horse racing industry and the continued decline of Atlantic City casinos. The only difference will be that New York State and Pennsylvania will reap the benefits, not New Jersey.

Here is a proposal that has “win-win” possibilities. The governor has said he would be willing to give away the Meadowlands infrastructure to someone who would operate the track and end the need for state subsidies. Why not give the Meadowlands Racetrack to the Atlantic City casino industry. Let them turn it into “Atlantic City North,” so as to present a full-service gambling opportunity to the New York City, Long Island, southern Connecticut, and northern New Jersey markets—a casino that is within an hour’s drive of 15,000,000 people.

Here is how it would work. Set up a separate corporation and give every operating Atlantic City Casino a percentage of the stock, proportionate to its share of the gambling revenue in Atlantic City in any base year—maybe 2009 or 2010. Turn the racetrack into a combination racing and full casino operation, with every game now allowed in AC casinos. The retrofitting for this conversion would be expensive, but the potential profits are immense. And the salvation of the racing industry in New Jersey would be an added benefit .

This deal would have to be structured in a way that the State can eventually recoup its investment in the Meadowlands, and maybe even earn a little on-going profit. Atlantic City interests would gain a northern base of operations, with very little upfront investment—the physical plant is already there, as is the market.

The details can be worked out, but the concept seems like win-win to me.

About

RICHARD MUTI is a graduate of the United States Naval Academy, Harvard Business School, and Rutgers Law School. He is a former Naval Aviator, a former trial prosecutor, a former college professor, and a former mayor of Ramsey, his hometown in New Jersey where he continues to reside. He has published two books (and is working on his third) and has authored more than 70 newspaper and magazine articles on wide-ranging subjects. He currently works as Chief Operating Officer for a medium-sized private company that makes diagnostic equipment for health care professionals. Mr. Muti is an elected trustee on the Ramsey Board of Education. The opinions expressed here relating to education are his own and not those of the school board.